How Retail has Adapted: The Evolution of Inventory Management Systems

When we think about fashion, a lot of things come to mind: glitzy fashion shows, beautiful models, innovative cuts and fabrics, and clothing stores that range from H&M to Balenciaga. But what few think about is the behind-the-scenes aspect of fashion: the logistics.

The modern fashion landscape is characterised by globalisation and highly efficient supply chains that facilitate transnational production and sales. It could never have originated without the evolution of Inventory Management Software (IMS) and technology. IMS tracks inventory levels, orders, sales and deliveries so that businesses can plan their inventory to ensure that they do not suffer from overstocking or product shortages. This becomes integral in keeping costs low while satisfying customers.

Over time, IMS have evolved with advancements in manufacturing processes to better suit the needs of businesses of the time. This, in turn, has affected the retail practices of these businesses, eventually culminating in the quick, convenient and global retailing practices of today.

Let’s take a walk down history to see just how far the evolution of IMS has brought us in retail, and where we could be expected to go from now.

The Evolution of IMS

The first shops and retail establishments were relatively small and local. They predominantly served their neighbours and townsfolk and did not require highly advanced IMS as they did not have a lot of product to store and sell. At this point in time, inventory management consisted of manual counting by shopkeepers to tally the units sold and forecast their future needs. It was not a very accurate system but due to the small size of operations, there was no push to improve efficiency.

This all changed once the industrial revolution hit. The industrial revolution brought with it huge changes in manufacturing practices, pivoting the industry towards mass-production and technical innovation. As such, with larger production and supply of goods, an improved system for inventory management was required to upscale retail and satisfy the increased consumer demand. This ushered in the punch card system.

The punch card system refers to an inventory taking system which uses a card that would record data by putting small holes in it. These cards could then be read by machines which could derive the necessary information from the holes in then. This system was first developed by Herman Hollerith and later modified by a team at Harvard University in the early 1930’s. It allowed the sale of items to be recorded from which inventory could be calculated and managed. However, the system was also too expensive and slow to be used commonly.

Following the punch card system was the barcode which was invented in the 1940’s. The barcode utilised light-sensitive ink and a reader to read information off of items. However, the early ones were too bulky and could not store a lot of information. This meant that they were not widely used at the time. It was only in the 1980’s and 1990’s that the bar code system became the staple that we see in stores today becoming affordable, efficient, and widely-adopted.

The 2000’s saw the emergence of Radio-Frequency Identification (RFID) technology. RFID was first patented in the 1970’s but became common used in the 2000’s. RFID had two separate pieces: a micro-chip which transmits information about the product, and a data collection device which reads this information. RFID improved upon the barcode with the ability to store more information and to read the information transmitted by the micro-chip without the reader needing to be in direct sight of the RFID tag. This technology allows vendors to better track their inventory im huge warehouses which allows operators like Amazon to function efficiently and globally on a large scale.

IMS of the Future

Without inventory tracking RFID, suppliers would find it difficult to keep track of rapidly-moving products, and to serve a global customer base. Improvements in this area include Real-Time Location Services (RTLS) which uses passive RFID readers to constantly monitor products within the scanner’s range without needing to trigger an RFID scan manually. However, the technology is currently too expensive to use on consumer products and are instead utilised within work areas in warehouses to track workflow and optimise supply-chain management. This could translate into faster delivery times for consumers.

Passive RFID readers are only one type of RTLS. RTLS technologies are a relatively new development that is being modified and improved upon, and the new decade is sure to see many advancements in IMS that will facilitate easier and smoother retail transactions.

IMS have changed throughout history to accommodate the consumer needs and expectations of the time and have facilitated better retail practices. The evolution of these systems have allowed retailers to ship globally, and make the process more convenient for consumers. But the journey is far from over, and retail is sure to evolve even more with the advancements in IMS that are being developed.